2007 (7) TMI 495 - AT - Central Excise

Summary

Issues involved: Confirmation of duty on allegation of clandestine manufacture and removal of processed MM fabrics, imposition of personal penalty on manufacturing unit and director, challenge to imposition of penalty under Rule 173Q and Rule 209A of Central Excise Rules.

Confirmation of duty and imposition of penalty:
The duty of Rs. 11,15,901/- was confirmed against the appellant for clandestine removal of processed MM fabrics, along with personal penalties imposed on the manufacturing unit and the director. The appellant did not dispute the duty demand but challenged the imposition of personal penalties under Rule 173Q and Rule 209A of the Central Excise Rules. The appellant's advocate argued that the penalty could not be sustained as Clause I of Rule 173Q was not specified by the adjudicating authority. The advocate relied on the Supreme Court decision in Amrit Foods v. C.C.E. and a Tribunal decision in Parag Fan & Cooling Systems Ltd. v. C.C.E. to support their case.

Arguments and decision on penalties:
The Departmental Representative countered the appellant's arguments by stating that the allegations and evidences were detailed in the show cause notice, and the authorities had discussed them before confirming the penalties. It was argued that in cases of clandestine removal, a penalty of 100% had to be imposed. The Tribunal found merit in the Departmental Representative's contention, noting that the show cause notice and the impugned order provided detailed allegations and evidence. The appellant had admitted to the clandestine removal, justifying penal action under Rule 173Q and Section 11AC. The Tribunal held that the absence of a sub-clause of Rule 173Q would not invalidate the penalty. Considering the duty amount was paid before the show cause notice and following a Delhi High Court decision, the penalty on the manufacturing unit was reduced to 25% of the confirmed duty amount. However, the penalty on the director was set aside.

Disposition of appeals:
Both appeals were disposed of in the above manner, with the penalties adjusted for the manufacturing unit and the director based on the Tribunal's findings and legal precedents cited during the proceedings.